Bhartiya Janta Party faced its biggest setback on Tuesday after facing defeat in Chhattisgarh and Rajasthan and Congress almost positioned with the same votes in Madhya Pradesh.
This is a reality check for BJP that does not seem in good colors as per the result of the polls.
The stock market opened at a lower opening on Monday due to several factors like the exit polls and a drop in the US equity market resulting from the trade disputes with China and another reason being a weaker jobs Report on Friday.
You Might Also Like To Read Projected costs for elections in 2019 - Predicted by the experts, amount close to Rs. 30,000 crore
But Tuesday was a turbulent day at the Dalal Street with BJP loosing and the resignation of the RBI governor Urjit Patel.
Before Monday midnight, Nifty futures on Singapore Exchange had dropped as much as 4 per cent. The Sensex dropped 500 points in the opening trade on Tuesday, but was back in a stable position by midday. The rupee opened 112 paise lower than the dollar in the morning, but enhanced that to 40 paise by 12 noon.
This election shall have three major impacts: the BJP gets a hard reality check; the Congress gets the confidence in coalition talks, and lastly the TRS and MNF may want to trip the ball in their court and decide to play kingmakers rather than joining the coalition.
On the other hand this political defeat may make BJP nervous and may straightaway head towards increasing their PR and populism activities which will be damaging for the economy. Further the signs of the loss of BJP may be a driving force for the opposition alliance and shall further diffuse the prospects of BJP in Circa 2019. These back to back downfalls for the BJP may pass a negative sign to the foreign investors and will lead to a loss of the confidence of the overseas investors in the Indian market.
The results of the elections are a sign of the community viewpoints regarding the 2019 general elections. CLSA had also pointed out that if BJP looses in two states out of the three prominent states i.e. Chhattisgarh, Madhya Pradesh and Rajasthan. It will portray a negative image for BJP in the market.
After the loss of BJP in the elections it is very much clear that the farm disputes are real as the three BJP ruled states have a huge farmer population. This should also reason for a united front amongst opposition parties, intensifying non-BJP parties prior to the national election.
There was a gain of nearly 1% on both Nifty and Sensex on Friday, after the exit polls, after facing three successive days of losses. The foreign investors have net sold shares with a value of Rs 1,000 crore in the five trading sessions conducted till December.
Some experts pointed out that the global market sentiment would have a larger bearing on the market instead of the polls.
Rahul Arora, CEO, institutional equities, Nirmal Bang said that “I don’t think the polls will have a bearing on the market as they are all over the place. However, markets will continue to be soft because of the weak US market.”
Market experts are of the belief that letdown by the US and China to come to an acceptable solution to end trade disputes remains a real and serious problem.